[Congressional Record (Bound Edition), Volume 161 (2015), Part 13]
[House]
[Pages 18168-18170]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              {time}  1930
                  POLICYHOLDER PROTECTION ACT OF 2015

  Mr. POSEY. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 1478) to provide for notice to, and input by, State insurance 
commissioners when requiring an insurance company to serve as a source 
of financial strength or when the Federal Deposit Insurance Corporation 
places a lien against an insurance company's assets, and for other 
purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 1478

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Policyholder Protection Act 
     of 2015''.

     SEC. 2. ENSURING THE PROTECTION OF INSURANCE POLICYHOLDERS.

       (a) Source of Strength.--Section 38A of the Federal Deposit 
     Insurance Act (12 U.S.C. 1831o-1) is amended--

[[Page 18169]]

       (1) by redesignating subsections (c), (d), and (e) as 
     subsections (d), (e), and (f), respectively; and
       (2) by inserting after subsection (b) the following:
       ``(c) Authority of State Insurance Regulator.--
       ``(1) In general.--The provisions of section 5(g) of the 
     Bank Holding Company Act of 1956 (12 U.S.C. 1844(g)) shall 
     apply to a savings and loan holding company that is an 
     insurance company, an affiliate of an insured depository 
     institution that is an insurance company, and to any other 
     company that is an insurance company and that directly or 
     indirectly controls an insured depository institution, to the 
     same extent as the provisions of that section apply to a bank 
     holding company that is an insurance company.
       ``(2) Rule of construction.--Requiring a bank holding 
     company that is an insurance company, a savings and loan 
     holding company that is an insurance company, an affiliate of 
     an insured depository institution that is an insurance 
     company, or any other company that is an insurance company 
     and that directly or indirectly controls an insured 
     depository institution to serve as a source of financial 
     strength under this section shall be deemed an action of the 
     Board that requires a bank holding company to provide funds 
     or other assets to a subsidiary depository institution for 
     purposes of section 5(g) of the Bank Holding Company Act of 
     1956 (12 U.S.C. 1844(g)).''.
       (b) Liquidation Authority.--The Dodd-Frank Wall Street 
     Reform and Consumer Protection Act (12 U.S.C. 5301 et seq.) 
     is amended--
       (1) in section 203(e)(3) (12 U.S.C. 5383(e)(3)), by 
     inserting ``or rehabilitation'' after ``orderly liquidation'' 
     each place that term appears; and
       (2) in section 204(d)(4) (12 U.S.C. 5384(d)(4)), by 
     inserting before the semicolon at the end the following: ``, 
     except that, if the covered financial company or covered 
     subsidiary is an insurance company or a subsidiary of an 
     insurance company, the Corporation--
       ``(A) shall promptly notify the State insurance authority 
     for the insurance company of the intention to take such lien; 
     and
       ``(B) may only take such lien--
       ``(i) to secure repayment of funds made available to such 
     covered financial company or covered subsidiary; and
       ``(ii) if the Corporation determines, after consultation 
     with the State insurance authority, that such lien will not 
     unduly impede or delay the liquidation or rehabilitation of 
     the insurance company, or the recovery by its 
     policyholders''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Florida (Mr. Posey) and the gentlewoman from Wisconsin (Ms. Moore) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Florida.


                             General Leave

  Mr. POSEY. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days in which to revise and extend their remarks and 
include extraneous material on the bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Florida?
  There was no objection.
  Mr. POSEY. Mr. Speaker, I yield myself 5 minutes.
  Mr. Speaker, I want to thank my colleague on the Financial Services 
Committee, Mr. Sherman, for all of his help and support on the 
Policyholder Protection Act as well as the chairman and ranking member 
of the committee for their support.
  I have devoted a great deal of time to insurance issues both as a 
State legislator in Florida and as a Member of Congress. For over 3 
years, I have been pushing legislation to address problems that Dodd-
Frank created for insurance companies and, more importantly, their 
policyholders.
  I credit former Congresswoman Judy Biggert for bringing these issues 
to light and for offering a positive solution focused on protecting 
consumers.
  After a lot of hard work, multiple hearings, drafts, redrafts, and so 
forth, we now have before us this bipartisan, commonsense legislation 
that will ensure that State regulators continue to have the tools they 
need to protect policyholders back home.
  Mr. Speaker, insurance policyholders shouldn't be on the hook for an 
affiliated company's failure or financial distress. But, unfortunately, 
that is an all-too-real scenario under the current law.
  Today, in certain circumstances, insurance assets--those set aside to 
pay out policyholders' claims--could be used as a source of strength to 
offset risky bets of an organization affiliated with the insurance 
company.
  This practice could threaten the solvency of an insurer and undermine 
its ability to keep promises it makes to its customers, customers who 
rely on their policies to protect their families' homes, their 
livelihoods, and their retirement.
  It is simply wrong to force middle class families to put their 
homeowner's or life insurance policies at risk because of bad bets that 
someone might have made on Wall Street. Therefore, our bill clarifies 
that State regulators can wall off these assets from contagion, 
regardless of how an insurance company is structured.
  The bottom line here is that insurance policies shouldn't be raided, 
period, and certainly not to bail out a financial institution that made 
poor decisions. Consumers deserve certainty that they will be 
protected, which is why our bill will also require the FDIC to notify 
State regulators and consult with them before taking a lien on 
insurance company assets. In the rare event that this action is being 
considered, this legislation requires that the FDIC first consider the 
impact that taking such a lien could have on policyholders.
  Taken together, these measures safeguard insurance assets and make 
certain that they continue to be used for their primary purpose, which 
is to pay out the claims of policyholders.
  The Policyholder Protection Act enjoys broad support from insurance 
regulators, State regulators, guaranty funds, consumers 
representatives, and the industry.
  Mr. Speaker, I am proud of our work on this commonsense consumer 
protection bill. I urge all of my colleagues to support it.
  Mr. Speaker, I reserve the balance of my time.
  Ms. MOORE. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in strong support of H.R. 1478, the Policy 
Protection Act. I applaud my colleagues, Mr. Posey of Florida and Mr. 
Sherman of California, on their diligent work that they have put into 
crafting this legislation in the Financial Services Committee. I 
supported this legislation in committee.
  The bill, in a nutshell, ensures that insurance company assets are, 
first and foremost, used to protect and pay policyholders' claims.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from California (Mr. Sherman) to further discuss this bill.
  Mr. SHERMAN. I thank the gentlewoman for yielding.
  Mr. Speaker, it has been a pleasure to work with the gentleman from 
Florida on this bill. I was pleased to join him in introducing this 
legislation.
  This is a commonsense bill. It has, I believe, total support. We 
voted on it in committee. It was supported unanimously. It has no 
objection from any of the regulators, such as the FDIC, or others.
  It is supported by most insurance commissioners all over the country, 
including Dave Jones, Insurance Commissioner in California. It is 
supported by the American Council of Life Insurers, Property Casualty 
Insurers, and the Big I. So this bill has industry and the regulators 
behind it, Democrats and Republicans. It is unanimous.
  What does the bill do? It deals with the circumstance where you have 
an insurance company that is a subsidiary of a financial services 
holding company, and it basically lays out the principle that the 
assets of the insurance company are there to pay insurance claims.
  The State regulator of the insurance company regulates that insurance 
subsidiary and makes sure that the assets are there to provide 
insurance reserves and to pay insurance claims. Those assets cannot be 
invaded to pay for bad bets made by affiliated companies.
  So, first, the bill says that State-regulated insurance company 
resources cannot be used as a source of strength for an affiliated 
financial firm that is being liquidated under title II of Dodd-Frank.
  Second, the financial regulator may not place a lien on the assets of 
the State-regulated insurance company under title II unless the State 
insurance commissioner consents. It is the State insurance 
commissioner's fundamental duty to protect the policyholders.

[[Page 18170]]

  Finally, the State insurance commissioner has the primary authority 
to determine whether to liquidate or rehabilitate insurance companies.
  The insurance commissioners did an excellent job during the meltdown 
of 2008 to make sure that policyholders were paid. This bill reaffirms 
that the State regulators have the ability to wall off insurance 
company assets to protect policyholders. The bill will make sure that 
those assets are not jeopardized by complex bets, risk-taking, or poor 
management of affiliated companies.
  In a nutshell, we want to make sure that those who have insurance 
feel secure. This bill will do that.
  Mr. POSEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
Missouri (Mr. Luetkemeyer), the chairman of the Housing and Insurance 
Subcommittee.
  Mr. LUETKEMEYER. Mr. Speaker, I thank the gentleman from Florida for 
yielding.
  A majority of the Financial Services Committee and, in fact, the 
majority of Congress recognizes the need to preserve the current State-
based model of insurance regulation. It is an important conversation 
because our model, different from others around the world, centers on 
the protection of policyholders before anything else.
  H.R. 1478, the Policyholder Protection Act, introduced by the 
gentleman from Florida (Mr. Posey) and the gentleman from California 
(Mr. Sherman) works to guarantee the policyholder protections that have 
served the U.S. insurance system and consumers so well.
  The bill guarantees the authorities of State regulators to protect an 
insurance company from contagion, ensuring that policyholders can be 
paid for claims regardless of how that insurer is organized.
  It also codifies the existing role of the FDIC to consult with State 
regulators and requires full consideration of all implications a 
resolution could have on policyholders. The legislation also ensures 
that the States maintain authority over an insurer's resolution 
process.
  Insurers typically hold large amounts of capital. They do so because 
the primary function of an insurer is to pay claims. Mr. Posey's bill 
makes sure those assets which go towards payment of claims aren't used 
to offset other activities of affiliated businesses.
  There is a genuine concern that other affiliates could raid an 
insurance affiliate's assets to prop up another entity within its 
company's holdings. This should never be allowed. This bill prevents 
that from happening. In other words, it says ``hands off'' to other 
assets of the insurance company.
  The Policyholder Protection Act enjoys broad bipartisan support. It 
was passed unanimously by the Financial Services Committee because it 
codifies protections for insurance policyholders.
  I congratulate the gentleman from Florida and the gentleman from 
California on their bill and thank them for their work on behalf of the 
consumers. I urge all my colleagues to join me in supporting this 
legislation.
  Ms. MOORE. Mr. Speaker, I yield myself such time as I may consume.
  This bill, which Mr. Sherman and Mr. Posey have worked so diligently 
on, brings parity among State law, Federal bank holding company laws, 
and now the savings and loan holding companies.
  It clarifies that the FDIC's backup receivership authority is not 
triggered if a State insurance regulator decides to rehabilitate rather 
than to liquidate a troubled insurance company.
  I certainly commend this bill to my colleagues. The Financial 
Services Committee has looked it over carefully. I urge support of this 
balanced proposal.
  Mr. Speaker, I yield back the balance of my time.
  Mr. POSEY. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Florida (Mr. Posey) that the House suspend the rules and 
pass the bill, H.R. 1478, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

                          ____________________